Pedestrians talk near a parking lot outside the building housing the offices of the Mossack Fonseca law firm in Panama City, Panama. (Photographer: Susana Gonzalez/Bloomberg)

U.S. Accuses Four of Fraud in First Panama Papers Charges

(Bloomberg) -- U.S. authorities charged four people with stashing millions of dollars in offshore shell companies and bank accounts to avoid U.S. taxes with the help of Panamanian law firm Mossack Fonseca & Co., in the first U.S. criminal prosecution to emerge from the so-called Panama Papers case.

Among those charged by federal prosecutors in New York were a lawyer at the now-defunct firm, an investment adviser at an affiliated asset management company, a client and his accountant. The charges include tax evasion, money laundering and wire fraud, among others. Three of the four have been arrested, U.S. authorities said.

In 2016, millions of documents leaked to a consortium of journalists, showing how lawyers from Mossack Fonseca worked with European banks to create more than 200,000 offshore shell companies for rich clients, including world leaders, 140 politicians and public officials, star athletes and criminals that were used to hide wealth.

The files, which came to be known as the Panama Papers, dated back decades and involved billions of dollars in client transactions. The firm ultimately shut down. Most of the clients were international, though many others -- seemingly lower-profile -- were from the U.S.

Among those charged in the New York case was Ramses Owens, 50, once a partner at the law firm who the U.S. said helped create, market and service shell companies for wealthy clients. Prosecutors said he was assisted by Dirk Brauer, 54, who worked at an affiliated investment firm and was arrested in Paris on Nov. 15. Owens remains at large.

For almost two decades, prosecutors said, Owens and Brauer conspired to help U.S. taxpayer clients of Mossack Fonseca conceal assets, investments and the income generated from them, through offshore trusts and undeclared bank accounts, using “sham” foundations to own the shell companies and conceal the identities of the wealthy clients.

Bank accounts were established in locales with strict bank secrecy laws to keep records beyond the reach of U.S. authorities. If clients needed to bring funds back to the U.S. for expenses, they were taught to use undetectable means, such as debit cards or falsified sales to justify the revenue, according to the indictment.

Prosecutors also charged Harald Joachim von der Goltz, 81, a wealthy client of the firm, and his accountant, Richard Gaffey, 74, of conspiracy to evade taxes and launder money, and failure to declare foreign accounts.

“This indictment is a desperate attempt to salvage an American case out of the Panama Papers,” said Jeff Neiman, a lawyer for von der Goltz. “My client will be vindicated at trial.”

Gaffey’s attorney, Bill Lovett, didn’t immediately respond to a phone call seeking comment. Attorney information for the other defendants wasn’t available.

Click here to read the indictment

Von der Goltz, who is accused of hiding his ownership of shell companies he used to secret away tens of millions of dollars, was arrested in London on Dec. 3. Gaffey was arrested in Massachusetts on Tuesday.

Von der Goltz’s dealings with Mossack Fonseca were the subject of a lengthy story in the New York Times in 2016. A founder of Boston Capital Ventures, a firm that invested in small, high-growth companies primarily in the U.S., he reportedly amassed offshore holdings of about $70 million through a maze of corporations, foundations and bank accounts.

Funds were used to pay for expenses and investments in the U.S., at least in part on the instruction of his Boston-based accountant, Gaffey, the newspaper said.

Gaffey and Owens are also accused of helping an unnamed U.S. taxpayer defraud the U.S. by maintaining a series of offshore bank accounts to conceal wealth from the Internal Revenue Service.

©2018 Bloomberg L.P.